REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6110 OF 2009 Basir Ahmed Sisodiya .....Appellant versus Income Tax Officer .. Respondent JUDGMENT A.M. Khanwilkar, J. 1. This appeal takes exception to final judgment and order dated 21.8.2008 passed by High Court of Judicature for Rajasthan at Jodhpur (for short, High Court ) in Income Tax Appeal No. 69 of 2006, whereby appellant s appeal was dismissed and order of Income Tax Appellate Tribunal, Jodhpur Bench (for short, ITAT ) came to be upheld. 2. In short, appellant/assessee was served with notice under Section 143(2) of Income Tax Act, 1961 (for short, Signature Not Verified 1961 Act ) by Assessing Officer (for short, Officer ) for Digitally signed by DEEPAK SINGH Date: 2020.04.24 12:21:43 IST Reason: assessment year 1998 1999, pursuant to which assessment 2 order was passed on 30.11.2000. This appeal involves limited challenge to certain addition made under heads Trading Account and Credits in assessment order. Officer, inter alia, while relying on Balance Sheet and books of account, took note of credits amounting to Rs.2,26,000/ (Rupees two lakhs twenty six thousand only). Officer treated that amount as Cash credits under Section 68 of 1961 Act and added same in declared income of assessee (for short, second addition ). Officer then proceeded to compute income of assessee for concerned assessment year. relevant part of computation is mentioned below: Credits: On examining balance sheet and accounts books of assessee, it is apparent that assessee has shown credit amount of Rs.2,26,000/ in names of following 15 persons: Accordingly, sufficient time and opportunity was granted to prove veracity of credits of Rs. 2,26,000/ as shown by assessee. However false/wrong particulars or explanation were submitted with respect to credits shown by assessee. In this manner, credits of Rs.2,26,000/ shown in name of 15 persons, is not correct and any correct proof/evidence has not been produced by assessee with respect to income of creditors and source of income. Besides this, credits of Rs.2,26,000/ as shown in name of 15 persons is held as unexplained under Section 68 and added in declared income of assessee. Accordingly, computation of income of assessee for assessment year 1998 99 is as follows: 3 Income shown in Returns 87500/ 1. Disallowed deduction U/s.24(1) as per discussion 7200/ 2. Additions in gross profit 10000/ 3. Additions on basis of less Household expenses withdrawals 18000/ 4. Unexplained credits as per discussions 226000/ 261200/ Total taxable Income Tax 348700/ Assessment was made. Necessary forms were issued. Notice be issued separately for imposition of penalty under Section 272(1)(c). 3. Aggrieved, appellant/assessee preferred appeal before Commissioner of Income Tax (Appeals), Jodhpur (for short, CIT(A) ). appeal was partly allowed vide order dated 9.1.2003. However, as regards Trading Account and Credits in question, CIT(A) upheld assessment order. 4. appellant/assessee then preferred further appeal to ITAT. Having noted issues and objections raised by Department and appellant/assessee, ITAT partly allowed appeal vide order dated 4.11.2004. However, order relating to second addition (under consideration in present civil appeal) regarding credits of Rs.2,26,000/ (Rupees two lakhs twenty six thousand only) came to be upheld. 5. appellant/assessee then filed appeal before High Court under Section 260A of 1961 Act. appeal was 4 admitted on 27.4.2006 on following substantial question of law: Whether claim to purchase of goods by assessee could be dealt with under Section 68 of Income Tax as cash credit, by placing burden upon assessee to explain that purchase price does not represent his income from disclosed sources? principal argument of appellant/assessee was that once books of account have been rejected and assessment order has been passed, same books of account cannot be then relied upon by Officer to impose consequent addition(s). 6. High Court dismissed appeal vide impugned judgment and order dated 21.8.2008, as being devoid of merits. High Court opined that amount shown as credits was nothing but bogus entries and was justly added to income of appellant/assessee. Court also noted other reasons to dismiss appeal. Relevant part of judgment is reproduced hereunder: In our view, none of submissions advanced by learned counsel for appellant has force. Learned counsel has proceeded on basic assumption, about factum of purchase of goods, having accepted by authorities below, while categoric finding of Assessing Officer, which has not been disturbed in appeal is, that regarding this purchase from unregistered dealer assessee was called upon during course of assessment proceedings to prove correctness and genuineness of his claim, but he completely failed, and therefore, purchase cannot be accepted. In 5 our view, this finding, rather is clear and categoric, that no purchase was affected by assessee, and amount was shown in bogus manner, shown to be standing to credit of alleged purchasers, who could not be shown, to be either existent, or to be creditors of assessee, much less for consideration alleged by assessee. It is clear from assessment orders and finding affirmed in appeals, that opportunity was given to assessee to substantiate genuineness of alleged transactions, but assessee failed, and efforts made by Revenue, to investigate correctness of alleged transaction also could not yield any results, in favour of assessee. Thus it is clear, that amounts shown to be standing to credit of persons, which had been added to income of assessee, was clearly bogus entry, in sense that it was only purportedly shown to be amount standing to credit of fifteen persons, purportedly on account of assessee having purchased goods no credit from them, while since no goods were purchased, amount did represent income of assessee from undisclosed sources, which assessee had only brought on record (books of accounts), by showing to be amount belonging to purported sellers, and as liability of assessee. That being position, contention about impermissibility of making addition under this head, in view of addition of Rs.10,000/ having been made in trading account, cannot be accepted, as books of accounts has been rejected for purpose of assessing gross profit, as gross profit shown in books has not been accepted, on ground, that assessee had not maintained day to day stock registers, nor has produced or maintained other necessary vouchers, but then, if those books of accounts did disclose certain other assets, which are wrongly shown to be liabilities, and for acquisition of which assessee did not show source, it cannot be said that Assessing Officer was not entitled to use books of accounts for this purpose. (emphasis supplied) 6 7. appellant/assessee in present civil appeal has reiterated argument that Officer, having made addition under Section 144 of 1961 Act being best judgment assessment , had invoked powers under sub Section (3) of Section 145. For, assessment under Section 144 is done only if books are rejected. In that case, same books cannot be relied upon to impose subsequent additions, as has been done in this case under Section 68 of 1961 Act. appellant/assessee adopted three pronged plea in support of above contention; First, that assessment order refers to Section 145(2) of 1961 Act. It should have mentioned Section 145(3) of 1961 Act. For that, appellant/assessee relies on amendment of 1961 Act which came into effect from 1.4.1997. It is urged that Section 145(2) prior to 1.4.1997 (pre amendment) is akin to Section 145(3) post 1.4.1997 (post amendment). It is thus urged that Department committed error in mentioning Section 145(2) and not Section 145(3); Second, that assessment order in reference to first addition has incorrectly mentioned term not . According to appellant/assessee, prefix of paragraph and language used, makes it abundantly clear that 7 Department had relied upon Section 145(3) of 1961 Act to impose addition. appellant/assessee has also placed reliance on Hindi version of assessment order to buttress this submission; Third, that assessment was made under Section 144 as same refers to Section 145(3). Under Section 144, Officer has to make best judgment assessment . appellant/assessee urges that purport of stated provision is that Officer re assesses entire accounts and makes assessment of total income and thereafter computes income tax liability. Resultantly, Officer (after rejecting books of account) cannot then rely on same books of account to make any subsequent addition(s). appellant/assessee also argues that approach adopted by Officer would have effect of taxing same transaction twice. 8. To buttress aforesaid contentions, reliance is placed on Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income Tax, Hyderabad and Andhra1; Commissioner of Income Tax v. Aggarwal Engg. Co. (Jal.)2 and Commissioner of Income Tax vs. G.K. Contractors3. 1 [1959] 37 ITR 369 (AP) 2 (2006) 206 CTR (P&H) 648 3 (2009) 19 DTR (Raj) 305 (IT Appeal No. 13/2009, decided on 28.1.2009) 8 9. Per contra, respondent urged that assumption of appellant/assessee that assessment order had rejected books of accounts under Section 145(3) of 1961 Act is preposterous. In that, assessment in question came to be made under Section 143(3) of 1961 Act. Thus, Officer was justified in relying upon said books for making addition(s). respondent would also urge that while imposing first addition, assessment order does not reject books of accounts, but only that part which pertained to assessing gross profit, as assessee had not maintained day to day stock registers, nor had produced or maintained other necessary vouchers while determining gross profits. Additionally, respondent would also urge that amount mentioned under Credits in Balance Sheet is incorrect and qualifies as Cash Credits under Section 68 of 1961 Act, as stated in assessment order. Indisputably, Officer gave several opportunities to appellant/assessee to prove authenticity of entries in question. As matter of fact, summon notices were issued to named fifteen creditors, but no evidence/explanation was forthcoming. finding of fact so recorded by Officer is unexceptionable. respondent thus 9 contends that finding relating to cash credits, does not give rise to any substantial question of law. 10. Before we proceed to analyze rival submissions, we need to advert to I.A. No. 57442/2011 for permission to bring on record subsequent events. By this application, appellant/assessee has placed on record order passed by CIT(A) dated 13.1.2011, which considered challenge to order passed by Income Tax Officer under Section 271(1)(c) dated 17.11.2006 qua appellant/assessee for self same assessment year 1998 1999. Income Tax Officer had passed said order as consequence of conclusion reached in assessment order which had by then become final upto stage of ITAT vide order dated 27.4.2006 to effect that stated purchases by appellant/assessee from unregistered dealers were bogus entries effected by appellant/assessee. Resultantly, penalty proceedings under Section 271 were initiated by Officer. That order, however, has now been set aside by appellate authority [CIT(A)] in appeal preferred by appellant/assessee, vide order dated 13.1.2011 with finding that appellant/assessee had not made any concealment of 10 income or furnished inaccurate particulars of income for concerned assessment year. As consequence of decision of appellate authority, even criminal proceedings initiated against appellant/assessee have been dropped/terminated and appellant/assessee stands acquitted of charges under Section 276(C)(D)(1)(2) of 1961 Act vide judgment and order dated 6.6.2011 passed by Court of Additional Chief City Magistrate (Economic Offence), Jodhpur City in proceedings No. 262/2005. Reverting back to decision of appellate authority [CIT(A)], vide order dated 13.1.2011, it considered explanation offered by appellant/assessee in penalty proceedings concerning assessment year 1998 1999 and went on to observe thus: 17. During course of appellate proceedings, appellant filed application under Rule 46A vide letter dated 16.10.2008 and same was sent to ITO, Ward 1, Makrana vide this office letter dated 28.1.2009 and 1.12.2010 to submit remand report after examination of additional evidences. Along with application under Rules 46A, appellant filed affidavits from 13 creditors, sales Tax Order for Financial Year 97 98 showing purchases from unregistered dealer to tune of Rs.2,28,900/ , cash vouchers duly signed on revenue stamp for receipt of payment by unregistered dealers and copy of Rasan Card/Voter Identity Card to show identity of unregistered dealer. Assessing Officer recorded statements of 12 unregistered dealers out of 13. In report dated 22.12.2010, he mentioned that statements of above 12 persons were recorded on 15/16.12.2010 and in respect of identify, unregistered filed photo copies of their Voter 11 Identity Cards and all of them have admitted that they have sold marble on credit basis to Sh. Bashir Ahmed Sisodia, appellant, during Financial Year 97 98 and received payments after two or three years. However, he observed that none of them have produced any evidence in support of their statement since all are petty unregistered dealers of marble and doing small business and therefore, no books of account were maintained. Some of them have stated that they were maintaining small dairies in relevant period of time but they could not preserve old dairies. Some of them have stated that they have put their signature on vouchers on date of transactions. It is therefore, observed that Assessing Officer has neither doubted their identity nor any adverse comments in respect of purchase of marble slabs in Financial Year relevant at AY 98 99 has given in remand report. xxx xxx xxx 19. In respect of addition of Rs.2,26,000/ , it would be pertinent to note here that there is no denial of purchase of marble slabs worth Rs.4,78,900/ and sale of goods worth Rs.3,57,463/ and disclose of closing stock of Rs.2,92,490/ as disclosed in trading account for year ended on 31.3.98. . Without purchases of marbles, there could not have been sale and disclosure of closing stock in trading account and it suggests that appellant must have purchased marble slabs from unregistered dealers. . explanation given by appellant in respect of purchases from unregistered dealer and their genuineness are substantiated by filing of affidavits, producing before Assessing Officer in course of remand report and Assessing Officer did not find any objectionable in respect identity of unregistered dealers and claim made for sale of marble slabs to appellant in Financial Year relevant to AY 98 99. .. Thus, there was no justification not to accept purchase made from unregistered dealers. If such addition is made, it would give unreasonable rate of profit. vouchers in 12 respect of purchases made from unregistered dealers were produced by appellant. (emphasis supplied) Finally, in paragraph 20, appellate authority observed thus: 20. Under above facts and circumstances, I am of view that there was no either concealment of income or furnishing any inaccurate particulars of income and accordingly, penalty order dated 17.11.2006 passed by Assessing Officer is cancelled. grounds of appeal allowed. Notably, appellant/assessee has asserted in paragraph 2 of application (I.A. No. 57442/2011) that consequent to order passed by appellate authority dated 13.1.2011, Department has refunded penalty amount of Rs.98,153/ (Rupees ninety eight thousand one hundred fifty three only) alongwith interest to appellant/assessee. That means Department has allowed said order dated 13.1.2011 to become final. 11. We have heard learned senior counsel, Dr. Manish Singhvi and Mr. K. Radhakrishnan appearing for appellant and respondent, respectively. 12. Before dissecting rival submissions, we deem it apposite to reproduce relevant provisions as applicable at relevant time for assessment year 1998 1999 as below; Assessment 13 143. (1) (a) Where return has been made under section 139, or in response to notice under sub section (1) of section 142, (i) if any tax or interest is found due on basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to provisions of sub section (2), intimation shall be sent to assessee specifying sum so payable, and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly; and (ii) if any refund is due on basis of such return, it shall be granted to assessee: Provided that in computing tax or interest payable by, or refundable to, assessee, following adjustments shall be made in income or loss declared in return, namely: (i) any arithmetical errors in return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on basis of information available in such return, accounts or documents, is prima facie admissible but which is not claimed in return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in return, which, on basis of information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed: Provided further that where adjustments are made under first proviso, intimation shall be sent to assessee, notwithstanding that no tax or interest is found due from him after making said adjustments: Provided also that intimation for any tax or interest due under this clause shall not be sent after expiry of two years from end of assessment year in which income was first assessable. (b) Where as result of order made under sub section (3) of this section or section 144 or section 147 or section 14 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub section (4) of section 245D relating to any earlier assessment year and passed subsequent to filing of return referred to in clause (a), there is any variation in carry forward loss, deduction, allowance or relief claimed in return, and as result of which, (i) if any tax or interest is found due, intimation shall be sent to assessee specifying sum so payable, and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to assessee: Provided that intimation for any tax or interest due under this clause shall not be sent after expiry of four years from end of financial year in which any such order was passed. (c) Where assessee is member of association of persons or body of individuals and as result of adjustments made under first proviso to clause (a) of sub section (1) in income or loss declared in return made by association or body, as case may be, or as result of order made under sub section (3) of this section or section 144 or section 147 or section 154 or section 155 or sub section (1) or sub section (2) or sub section (3) or sub section (5) of section 185 or sub section (1) or sub section (2) of section 186 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub section (4) of section 245D, passed subsequent to filing of return referred to in clause (a), there is any variation in his share in income or loss of association or body, as case may be, or in manner of inclusion of his share in returned income, then, (i) if any tax or interest is found due, intimation shall be sent to assessee specifying sum so payable, and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly, and 15 (ii) if any refund is due, it shall be granted to assessee: Provided that intimation for any tax or interest due under this clause shall not be sent after expiry of four years from end of financial year in which any such adjustments were made or any such order was passed. (1A) (a) Where as result of adjustments made under first proviso to clause (a) of sub section (1), (i) income declared by any person in return is increased; or (ii) loss declared by such person in return is reduced or is converted into income, Assessing Officer shall, (A) in case where increase in income under sub clause (i) of this clause has increased total income of such person, further increase amount of tax payable under sub section (1) by additional income tax calculated at rate of twenty per cent on difference between tax on total income so increased and tax that would have been chargeable had such total income been reduced by amount of adjustments and specify additional income tax in intimation to be sent under sub clause (i) of clause (a) of sub section (1); (B) in case where loss so declared is reduced under sub clause (ii) of this clause or aforesaid adjustments have effect of converting that loss into income, calculate sum (hereinafter referred to as additional income tax) equal to twenty per cent of tax that would have been chargeable on amount of adjustments as if it had been total income of such person and specify additional income tax so calculated in intimation to be sent under sub clause (i) of clause (a) of sub section (1); (C) where any refund is due under sub section (1), reduce amount of such refund by amount equivalent to additional income tax calculated under sub clause (A) or sub clause (B), as case may be. 16 (b) Where as result of order under sub section (3) of this section or section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, amount on which additional income tax is payable under clause (a) has been increased or reduced, as case may be, additional income tax shall be increased or reduced accordingly, and, (i) in case where additional income tax is increased, Assessing Officer shall serve on assessee notice of demand under section 156; (ii) in case where additional income tax is reduced, excess amount paid, if any, shall be refunded. (1B) Where assessee furnishes revised return under sub section (5) of section 139 after issue of intimation, or grant of refund, if any, under sub section (1) of this section, provisions of sub sections (1) and (1A) of this section shall apply in relation to such revised return and (i) intimation already sent for any income tax, additional income tax or interest shall be amended on basis of said revised return and where any amount payable by way of income tax, additional income tax or interest specified in said intimation has already been paid by assessee then, if any such amendment has effect of (a) enhancing amount already paid, intimation amended under this clause shall be sent to assessee specifying excess amount payable by him and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly; (b) reducing amount already paid, excess amount paid shall be refunded to assessee; (ii) amount of refund already granted shall be enhanced or reduced on basis of said revised return and where amount of refund already granted is 17 (a) enhanced, only excess amount of refund due to assessee shall be paid to him; (b) reduced, excess amount so refunded shall be deemed to be tax payable by assessee and intimation shall be sent to assessee specifying amount so payable, and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly: Provided that assessee, who has furnished revised return under sub section (5) of section 139 after service upon him of intimation under sub section (1) of this section, shall be liable to pay additional income tax in relation to adjustments made under first proviso to clause (a) of sub section (1) and specified in said intimation, whether or not he has made said adjustments in revised return. (2) Where return has been made under section 139, or in response to notice under sub section (1) of section 142, Assessing Officer shall, if he considers it necessary or expedient to ensure that assessee has not understated income or has not computed excessive loss or has not under paid tax in any manner, serve on assessee notice requiring him, on date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which assessee may rely in support of return: Provided that no notice under this sub section shall be served on assessee after expiry of twelve months from end of month in which return is furnished. (3) On day specified in notice issued under sub section (2), or as soon afterwards as may be, after hearing such evidence as assessee may produce and such other evidence as Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, Assessing Officer shall, by order in writing, make assessment of total income or loss of assessee, and determine sum payable by him on basis of such assessment. (4) Where regular assessment under sub section (3) of this section or section 144 is made, 18 (a) any tax or interest paid by assessee under sub section (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or amount refunded under sub section (1) exceeds amount refundable on regular assessment, whole or excess amount so refunded shall be deemed to be tax payable by assessee and provisions of this Act shall apply accordingly. (5) provisions of this section as they stood immediately before their amendment by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for assessment year commencing on 1st day of April, 1988, or any earlier assessment year and references in this section to other provisions of this Act shall be construed as references to those provisions as for time being in force and applicable to relevant assessment year. Explanation. intimation sent to assessee under sub section (1) or sub section (1B) shall be deemed to be order for purposes of sections 246 and 264. Best judgment assessment. 144. (1) If any person (a) fails to make return required under sub section (1) of section 139 and has not made return or revised return under sub section (4) or sub section (5) of that section, or (b) fails to comply with all terms of notice issued under sub section (1) of section 142 or fails to comply with direction issued under sub section (2A) of that section, or (c) having made return, fails to comply with all terms of notice issued under sub section (2) of section 143, Assessing Officer, after taking into account all relevant material which Assessing Officer has gathered, shall, after giving assessee opportunity of being heard, make assessment of total income or loss to best of his judgment and determine 19 sum payable by assessee on basis of such assessment: Provided that such opportunity shall be given by Assessing Officer by serving notice calling upon assessee to show cause, on date and time to be specified in notice, why assessment should not be completed to best of his judgment: Provided further that it shall not be necessary to give such opportunity in case where notice under sub section (1) of section 142 has been issued prior to making of assessment under this section. (2) provisions of this section as they stood immediately before their amendment by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for assessment year commencing on 1st day of April, 1988, or any earlier assessment year and references in this section to other provisions of this Act shall be construed as references to those provisions as for time being in force and applicable to relevant assessment year. Method of accounting. 145. (1) Income chargeable under head "Profits and gains of business or profession" or "Income from other sources" shall, subject to provisions of sub section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by assessee. (2) Central Government may notify in Official Gazette from time to time accounting standards to be followed by any class of assesses or in respect of any class of income. (3) Where Assessing Officer is not satisfied about correctness or completeness of accounts of assessee, or where method of accounting provided in sub section (1) or accounting standards as notified under sub section (2), have not been regularly followed by assessee, Assessing Officer may make assessment in manner provided in section 144. (emphasis supplied) 13. Reverting to findings and conclusions recorded by Officer and which commended to appellate authority, as well 20 as, High Court, it must follow that appellant/assessee despite being given sufficient opportunity, failed to prove correctness and genuineness of his claim in respect of purchases of marbles from unregistered dealers to extent of Rs.2,26,000/ (Rupees two lakhs twenty six thousand only). Resultantly, said transactions were assumed as bogus entries (standing to credit of named dealers who were non existent creditors of assessee). 14. However, it has now come on record that appellant/assessee in penalty proceedings offered explanation and caused to produce affidavits and record statements of concerned unregistered dealers and establish their credentials. That explanation has been accepted by CIT(A) vide order dated 13.1.2011. In paragraph 17 of said decision reproduced hitherto, it has been noted that Officer recorded statements of 12 unregistered dealers out of 13 and their identity was also duly established. After analysing evidence so produced by appellant/assessee, appellate authority [(CIT(A)] noted that Officer had neither doubted identity of those dealers nor any adverse comments were offered in reference 21 to their version regarding sale of marble slabs by them to appellant/assessee in financial year relevant to assessment year 1998 1999 and receipt of payments after two to three years. Further, there was no denial of purchase of marbles worth Rs.4,78,900/ (Rupees four lakhs seventy eight thousand nine hundred only) by assessee and sale thereof worth Rs.3,57,463/ (Rupees three lakhs fifty seven thousand four hundred sixty three only) with closing stock of Rs.2,92,490/ (Rupees two lakhs ninety two thousand four hundred ninety only), as disclosed in trading account for year ended on 31.3.1998. appellate authority thus found that without purchases of marbles, there could be no sale and disclosure of closing stock in trading account. In other words, materials on record would clearly suggest that concerned unregistered dealers had sold marble slabs on credit to appellant/assessee, as claimed. As consequence of this finding, appellate authority concluded that there was neither any concealment of income nor furnishing of inaccurate particulars of income by assessee. We are conscious of fact that these observations are made by competent forum (appellate authority) in penalty proceedings under Section 271 of 1961 22 Act in favour of assessee. However, what needs to be noted is that stated penalty proceedings were outcome of assessment order in question concerning assessment year 1998 1999. Indeed, at time of assessment, appellant/assessee had failed to produce any explanation or evidence in support of entries regarding purchases made from unregistered dealers. In penalty proceedings, however, appellant/assessee produced affidavits of 13 unregistered dealers out of whom 12 were examined by Officer. Officer recorded their statements and did not find any infirmity therein including about their credentials. dealers stood by assertion made by appellant/assessee about purchases on credit from them; and which explanation has been accepted by appellate authority in paragraphs 17 and 19 of order dated 13.1.2011. 15. To put it differently, factual basis on which Officer formed his opinion in assessment order dated 30.11.2000 (for assessment year 1998 1999), in regard to addition of Rs.2,26,000/ (Rupees two lakhs twenty six thousand only), stands dispelled by affidavits and statements of concerned unregistered dealers in penalty proceedings. That 23 evidence fully supports claim of appellant/assessee. appellate authority vide order dated 13.1.2011, had not only accepted explanation offered by appellant/assessee but also recorded clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by appellant/assessee for assessment year 1998 1999. That now being indisputable position, it must necessarily follow that addition of amount of Rs.2,26,000/ (Rupees two lakhs twenty six thousand only) cannot be justified, much less, maintained. 16. Accordingly, this appeal ought to succeed on this count alone and it would be unnecessary for us to dilate on other questions/contentions urged by parties as referred to in earlier part of this judgment. 17. Accordingly, this appeal is allowed. addition of Rs.2,26,000/ (Rupees two lakhs twenty six thousand only) by Officer under Section 68 of 1961 Act, towards cash credit amount shown against names of concerned unregistered dealers for assessment year 1998 1999, is hereby set aside. rest of assessment order dated 30.11.2000 as modified by 24 CIT(A) vide order dated 9.1.2003, shall remain undisturbed. There shall be no order as to costs. All pending interlocutory applications are also disposed of. . J. (A.M. Khanwilkar) . J. (Dinesh Maheshwari) New Delhi; April 24, 2020. Basir Ahmed Sisodiya v. Income-tax Officer